Sign-and-trade with Orlando done

The Sonics have agreed to sign forward Rashard Lewis to a six-year contract worth the NBA maximum and then send him to the Orlando Magic for a conditional second-round pick and a trade exception worth between $9 million and $9.5 million, the PI has learned.

Lewis will sign a six-year deal worth in the neighborhood of $117 million and then begin a new career with the Orlando Magic. The Sonics do get something in compensation rather than letting Lewis walk for nothing. The trade exception allows the Sonics to take back $9 million to $9.5 million more in salary in a transaction without counting against the salary cap.

Or the Sonics could trade a draft pick for a veteran player who makes $8 million, for example, without having to send the other club a player to match salaries. In other words, the Sonics can now go after a veteran player to enhance their roster with more flexibility than if Lewis left as a free agent with no sign-and-trade. The Sonics have one year to use this exception.

The Sonics cannot use it to sign a free agent; it has to come via a trade. Lewis is set to make more than $16 million in the first year of his contract, but the trade exception is not for that much because Lewis is considered Base Year Compensation player. That means that Lewis’ cap value is lower than his actual contract because he received more than a 20 percent salary raise from the Magic.

That prevents teams from signing their own player to a bigger contract just to trade him for a player with an equal contract and circumventing the salary cap. Let’s say, the Sonics wanted to acquire a $15 million-per-year player and had only a $10 million-per-player to give. The Base Year Compensation prevents the Sonics from signing that player to a $15 million-per-season deal and then trading him to match salaries.

The sign-and-trade ensures that Lewis will receive in the neighborhood of $24 million in the sixth year of his deal and the Sonics get salary cap relief. Apparently, other clubs were promising to execute a sign-and-trade with the Sonics for a sixth year if the Magic didn’t, pressuring Orlando GM Otis Smith to shell out the extra $24 million.